Industrial Policies in India: Overview & Difference between National Investment, Manufacturing Zones and Special Economic Zones

Introduction

India’s industrial policies have undergone several phases, from the era of state-led industrialization following independence to liberalization and globalization initiatives starting in the 1990s. The overarching goal has been to foster industrial growth, enhance competitiveness, create employment opportunities, and contribute to India’s economy. 

Overview of Industrial Policies in India

1948:  First Industrial policy of India.

• • Role of the State in industrial development both as an entrepreneur and authority. 
  • India’s model- Mixed Economic Model. 
  • It classified industries into four broad areas
• Strategic Industries (Public Sector): Central Government had monopoly-Arms and ammunition, Atomic energy and Rail transport.
• Basic/Key Industries (Public-cumPrivate Sector): like coal, iron & steel, aircraft manufacturing, ship-building. 
  • To be set-up by the Central Government.
• Important Industries (Controlled Private Sector): continue under private sector however, the central government, in consultation with the state government, had general control over them.
• Other Industries (Private and Cooperative Sector): All other industries which were not included in the above mentioned three categories were left open for the private sector.
  • The Industries (Development and Regulation) Act was passed in 1951 to implement the Industrial Policy Resolution, 1948.

1956:  Industrial policy resolution

• Reservation of Industries
• Schedule A: This schedule had 17 industrial areas in which the Centre was given complete monopoly.
• Schedule B: There were 12 industrial areas put under this schedule in which the state governments were supposed to take up the initiatives with a more expansive follow up by the private sector.
• Schedule C: All industrial areas left out of Schedules A and B were put under this in which the private enterprises had the provisions to set up industries.
• Provision of Licencing: Established the so-called Licence-Quota-Permit regime (raj).
• Emphasis was on heavy industries, Regional Disparity, Emphasis on Small Industries, Agricultural Sector

New Industrial Policy (Economic Reforms) 1991

• De-reservation of Public sector: Presently, only two sectors- Atomic Energy and Railway operations are reserved exclusively for the public sector. 
• De-licensing: Abolition of Industrial Licensing except for Electronic aerospace and defense equipment, Specified hazardous chemicals, Industrial explosives, Cigars and cigarettes of tobacco and manufactured tobacco substitutes. 
• Disinvestment of Public Sector
• Liberalization of Foreign Investment

National Manufacturing Policy, 2011

• Boost the manufacturing sector’s growth to 12-14% over the medium term. The target is for the manufacturing sector to contribute at least 25% to the national GDP by 2022.
• Create 100 million additional jobs by 2022; Emphasizes the development of suitable skill sets among rural migrants and the urban poor to ensure inclusive growth.
• Increase domestic value addition and technological depth in manufacturing.
• Enhancing the global competitiveness of Indian manufacturing.
• Sustainability is emphasized.

National Investment Fund (NIF) 

• Established in 2005.
• With effect from the fiscal year 2013-14, will be credited to the existing NIF which is a Public Account. It is of It would remain there until withdrawn/invested for the approved purposes
• The proceeds from the disinvestment of PSUs will be channelised into NIFs; maintained outside the Consolidated Fund of India. 
• 75% of the fund is invested in social sector schemes → education, health and employment. 
• The residual 25% of the annual income of the fund → to meet the capital investment requirements of profitable and revivable CPSUs.
• The Government further approved inclusion of the following purposes also, to be financed from the NIF (21st February, 2013).
  • Investment by the Government in RRBs/IIFCL/NABARD/Exim Bank.
  • Equity infusion in various Metro projects.
  • Investment in Bhartiya Nabhikiya Vidyut Nigam Limited and Uranium Corporation of India Ltd.
  • Investment in Indian Railways towards capital expenditure.

Exchange Traded Fund 

• It will cumulate the shares of selected PSUs proposed for disinvestment under a single fund.
• These units can be listed in the stock exchange as an ETF and can be traded like ordinary shares.

Bharat-22 

• Has 19 central public sector enterprises, government banks and some holdings of the government investment arm Specified Undertaking of the Unit Trust of India (SUUTI).

Difference between National Investment and Manufacturing Zones and Special Economic Zones

Conclusion

• India’s industrial policies have evolved significantly over time, transitioning from a regime of heavy regulation and protectionism to one that emphasizes liberalization, deregulation, and promotion of key sectors. 
• These policies play a crucial role in shaping the country’s industrial landscape, fostering growth, innovation, and competitiveness. 
• Moving forward, continued policy reforms, targeted interventions, and strategic initiatives will be essential to harness the full potential of India’s industrial sector and drive sustainable economic growth. 

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